David Harcourt had been retiring for approximately four years. At sixty-seven he had become quite accomplished at announcing it — to his wife, his accountant, several friends and, on particularly tiring evenings, himself. This did not prevent him arriving at Harcourt Engineering shortly after seven most mornings to deal with something the organisation chart suggested was no longer his problem.
The company employed forty-six people, turned over £8.4 million and made a little over £1 million in EBITDA. David owned 80 per cent of it, and he owned the factory too. The arrangement had made sense years before and had simply remained — as business structures often do, long after anyone remembers exactly why.
David’s managing director ran most of the business. The finance director knew the numbers better than David did. There were capable people throughout the company. David nevertheless remained the person everybody somehow found when something genuinely odd happened.
Then, within a short period, two things happened. A competitor approached him about buying the company, and his managing director and finance director asked whether he would consider a Management Buy Out (MBO).
This looked reassuringly like a decision. On one side was a trade sale: money, a clean transaction and the possibility of finally leaving. On the other was the MBO: continuity, familiar people and the attraction of seeing the management team take the company forward.
The obvious question was: which should David choose?
It was also, as it turned out, not quite the question.
The first movement
Rather than comparing the two transactions, we stopped. Not for long; just long enough to ask David what he was actually trying to achieve.
He wanted to stop working every day and he wanted financial security. But he also wanted the management team treated well, disliked the idea of the Harcourt name disappearing beneath a larger competitor’s branding, liked the company’s independence and rather liked owning the factory.
His family had grown up with the business in the background. None planned to run it, but David was not sure he wanted the connection to disappear. He wanted to leave without necessarily disposing of everything connected with the company simply to prove that he had retired.
This was the first useful movement. “Selling the business”, “retiring”, “selling my shares”, “leaving management”, “selling the factory” and “ending the family connection” had quietly become one large object called exit. They were not the same thing.
The decision therefore changed. It was no longer simply trade sale or MBO? It became: what combination of ownership, management, property, income and transition would allow David genuinely to leave what he no longer wanted while preserving what still mattered?
That was useful. It was not yet worth £1,500. The paid review began with what happened next.
What did the eventual solution actually have to achieve?
David’s wishes needed separating again, this time not into categories but into different degrees of importance.
Some things were requirements. Within eighteen months he wanted to be substantially out of day-to-day operating responsibility, with materially lower personal risk. The business also had to operate without David remaining its invisible emergency service.
Other things were strong preferences. He would prefer to keep the factory, preserve the company’s identity, give the existing management team a credible future and avoid maximising the sale price by agreeing to spend another three years effectively running the company for its new owner.
Then there were matters David himself had not resolved. How much money did he actually need? How much deferred consideration would he tolerate? How much of his future income was he prepared to leave dependent on Harcourt Engineering after he had supposedly left it?
There were similar ambiguities around family and legacy. What did “keeping a family connection” mean if nobody in the family wanted to work there? Did “preserving the business” mean the name, the factory, the people, its independence, its engineering culture — or all of them? These were not philosophical questions. They changed which transactions made sense.
The awkward tensions
Once David’s requirements were visible, the neatness of the original choice disappeared. A trade sale might give him the cleanest liquidity and greatest reduction in risk, while also producing exactly the integration he disliked. An MBO might preserve independence and reward management, while leaving David financing part of his own departure and depending on the business from which he wanted freedom.
Keeping the factory could give him rental income and preserve a connection with the place. It could also keep a large part of his wealth tied to the success of one tenant: Harcourt Engineering.
There was another question nobody had yet answered. Did the managing director and finance director actually want to own the company? Liking the idea of ownership was not necessarily the same as liking personal guarantees, debt, governance responsibility and the absence of David on Monday morning when Friday afternoon had gone wrong.
So instead of scoring trade sale against MBO in a spreadsheet, the review kept the tensions visible: financial certainty versus continuity; freedom versus stewardship; property retention versus a clean exit; management opportunity versus management burden; speed versus optionality. None had to be solved yet, but they could no longer hide inside two transaction labels.
What was still missing?
The next question was not simply “what else can we think of?” It was: what could still enter the picture and materially change the answer?
David had not quantified his retirement requirements. The management team’s appetite and financing capacity had not been tested. Nobody had established how dependent the company still was on David’s personal relationships and judgement.
The competitor’s approach was only indicative. Nobody yet knew what would happen to the factory, the management team, the Harcourt name or David himself after completion. The factory, meanwhile, had never been treated as a separate decision.
So those became evidence questions. Not an enormous due-diligence exercise: just the things capable of changing which routes remained credible.
The options became wider
At this point something else happened. Trade sale and MBO stopped being the only two answers.
A strategic sale remained possible, perhaps with David retaining the factory. The MBO remained possible too, but only if management genuinely wanted it, finance could support it and David’s continuing exposure was acceptable.
A phased succession also became visible. David might leave daily operations on his eighteen-month timetable without forcing ownership to change on the same day. That would create real evidence about whether management could operate without him before financing an irreversible transaction around the assumption that they could.
An Employee Ownership Trust (EOT) deserved testing too. It might preserve independence and continuity, but “employee ownership sounds like David” was not enough. An EOT specialist would need to test valuation, cash flow, governance, management capability, repayment and David’s future relationship with the company.
There was a fifth possibility: do nothing about ownership yet. Instead, spend a defined period removing founder dependence, strengthening management and making the company genuinely ready for David to leave, then reopen the ownership question from a stronger position.
None of these was a recommendation. They were routes that had earned the right to remain visible.
Now the specialists had better questions
The review could now specify what would discriminate between the routes. David needed to establish his financial floor: required capital, required income and acceptable residual risk. Management needed to decide whether it genuinely wanted ownership and could operate without him.
The accountant and corporate-finance advisers needed to establish normalised cash generation, financing headroom and what the business could safely support. A property specialist needed to establish the factory’s value and market rent. The competitor needed to put flesh on its proposal.
And if the EOT remained credible, an EOT specialist needed a much better question than “Can we do an EOT?”
Given David’s actual requirements, the management reality and the company’s financial capacity, what would an EOT achieve, what would it require him to continue carrying, and what would need to be true for it to be a genuinely good fit?
That is a substantially better brief.
The recommendation
The review did not tell David to sell to the competitor, pursue an MBO or establish an EOT. It told him what to do next.
First, establish how much financial independence he actually needed and how much continuing exposure he would accept. Second, test whether the management team genuinely wanted — and could carry — a business no longer dependent on David. Third, establish the company’s real cash-generation and financing capacity.
Only then should serious money be spent investigating the surviving transaction structures. That sequence stopped David commissioning expensive advisers to answer increasingly sophisticated versions of the wrong question.
David had begun with two doors. By the end there were more, which might initially sound unhelpful. But most now had labels and tests attached, and some would close quickly once the evidence arrived. For the first time, David knew what the eventual answer actually had to accomplish.
The purpose of the review was not to choose for him, but to turn a deceptively simple choice into a decision that could be solved properly.
What David actually received from the paid review
The review did not produce a transaction recommendation. It produced a decision that was ready for the right specialist work.
- The requirements the eventual solution had to meet — including what genuinely had to change, what David strongly preferred to preserve, and what was still unresolved.
- The routes still worth testing — including strategic sale, MBO, phased succession, an EOT and a readiness-first route, without pretending that all were feasible.
- The evidence needed to distinguish them — financial requirements, management appetite and capability, cash-generation and financing capacity, property implications and the real terms of the buyer’s proposal.
- The specialists who needed to answer each question — accountant, corporate-finance adviser, property adviser, EOT specialist and others where their expertise genuinely became necessary.
- The order in which to do the work — resolve the high-information questions first, then spend serious advisory money on the routes that survive.
The client is not paying for a clever reframe. The client is paying for a better-formed decision and a disciplined path from ambiguity to specialist-ready evidence.